PATTAYA, Thailand – Thailand’s tourism capital may soon feel the economic shockwaves from escalating tensions in the Middle East, with new analysis warning that a prolonged conflict could push oil prices higher, weaken the baht, and squeeze both businesses and travelers.
According to research from Kasikorn Research Center, if the conflict drags on for more than three months — an outcome analysts say is becoming increasingly likely — global crude oil prices could climb to an average of $80 per barrel. Such a surge would shave about 0.6% off Thailand’s GDP and push inflation up by roughly 1%, mainly through rising energy costs, pressure on tourism, and weaker exports.
For Pattaya, where tourism and transportation drive much of the local economy, the warning signals are hard to ignore.
A tourism city vulnerable to rising costs
Thailand relies heavily on imported energy, with around 70% of its total energy consumption sourced from abroad. More than 60% of the country’s crude oil imports come from the Middle East, much of it passing through the strategically critical Strait of Hormuz.
If that route remains disrupted due to the ongoing conflict involving Iran and regional tensions, the effects will cascade quickly through Thailand’s economy — and particularly through tourist hubs like Pattaya.
Higher global oil prices typically translate into rising fuel, electricity, and transport costs, which then filter down into everyday expenses such as hotel operations, restaurant supply chains, and local transport services.
In a city where millions of visitors rely on flights, taxis, buses, and boats, even modest increases in fuel costs can ripple through the entire tourism ecosystem.
Pressure on tourism and the baht
The research also warns that the conflict could weaken Thailand’s external stability. A rising oil import bill could shrink the country’s current account surplus, while global investors often rush toward the U.S. dollar during geopolitical crises.
That combination could lead to a weaker and more volatile Thai baht, raising the cost of imports even further.
For Pattaya’s tourism sector, currency movements cut both ways. A weaker baht may make Thailand cheaper for foreign visitors, but higher inflation and operating costs can quickly offset those advantages for businesses already grappling with rising prices and intense competition.
Three possible scenarios
The Kasikorn Research Center outlined three potential scenarios depending on how long the conflict lasts.
Scenario 1: Short conflict
If hostilities subside within about four weeks and oil supply disruptions remain limited, crude prices could fall back to around $60–70 per barrel. In this case, Thailand’s GDP would decline only slightly, by about 0.2%, with inflation rising just 0.1%. The impact on tourism and exports would likely remain temporary.
Scenario 2: Prolonged regional conflict
In the more likely scenario, attacks could damage oil infrastructure and disrupt shipping through the Strait of Hormuz for months, especially during the first three months of escalation. Under this scenario, oil prices could average $80 per barrel, significantly raising domestic energy costs and pushing inflation higher.
Scenario 3: Global escalation
In the worst-case scenario, the conflict could last up to a year, with indirect military support from Russia and economic backing from China for Iran. Even if the physical fighting remains limited to the Middle East, prolonged disruptions could keep the Strait of Hormuz closed and global energy markets under severe strain.
Pattaya businesses already on edge
For Pattaya’s hospitality sector, rising energy costs would be particularly painful. Hotels, transportation providers, fisheries, and restaurants all depend heavily on fuel and electricity, while energy costs can account for 10–33% of production costs in many industries.
Tourism operators are also wary because the government’s ability to cushion price shocks may be limited. The national Oil Fuel Fund has only recently begun recovering, and the state-owned Electricity Generating Authority of Thailand still carries significant debt from previous energy subsidy programs.
That leaves less fiscal room for the government to intervene compared with the global price surge that followed the Russian invasion of Ukraine.
A city used to crises — but not immune
Pattaya has survived economic shocks before — from pandemics to currency swings and geopolitical turmoil. Yet the latest warnings highlight how deeply global events can still affect a city built on international tourism.
If energy prices spike and inflation rises, the effects could reach everything from airline ticket prices to the cost of running beachside hotels and restaurants.
For now, businesses along Pattaya’s famous coastline are watching the headlines from the Middle East closely — hoping the crisis fades quickly, but preparing for the possibility that another global shock may soon wash up on their shores.
